If we can go by The Nation Barbados, story of today, the tax reform choices proposed by the IMF team focuses on tax efficiency rather than tax fairness. This is my interpetation as I have not yet seen the whole document. I for one believe that for a tax system to be effective and hence yield the highest level of income, it must first be first. Secondly. it must be stimulative and shepherd the country into the direction that best leverages its resources. However, the more we focus on the ease of collection at the expense of economic activity, the less we will achieve the overall aim of development. Further, I am somewhat intrigued by the Governors comments of earlier this week. He suggests that we need to close a $175 million fiscal gap in the next 6 months which represents 2% of GDP. Looking at the report, the original target was to reduce the deficit from 13.1% of GDP to $6.6% of GDP by March 31, 2015. He is suggesting more revenue raising and spending reduction measures. As a result of the measures implemented the economy has continued to slow. In my view the governors prescription is wrong. No more tinkering is required, the rate of closing the fiscal gap has increased each quarter, further austerity may result in overshooting the targets create further havoc in the economy. It is now time to slow ease the restraints placed on the economy and to prepare the climate for investment. While FDI is great to attract the Barbados economy must grow based on local internal and outbound investment. FDI has a follow on costs since the earnings from successful FDI program must be repaid largely from local earnings.
Posted on: Sun, 26 Oct 2014 17:59:06 +0000
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